Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/257029 
Year of Publication: 
2019
Citation: 
[Journal:] Economies [ISSN:] 2227-7099 [Volume:] 7 [Issue:] 4 [Article No.:] 97 [Publisher:] MDPI [Place:] Basel [Year:] 2019 [Pages:] 1-13
Publisher: 
MDPI, Basel
Abstract: 
Considering the goals of Modern Monetary Theorists, this article examines inflation stabilization and employment maximization through a Taylor Rule for fiscal policy, similar to John Taylor's foundational examination of the behavior of the Federal Reserve. If it is the role of the federal government to aid in the maintenance of the dual mandate of the Federal Reserve, then their behavior should follow a similar policy of setting an intermediate target of deficits relative to the maximum employment (the "Federal Job Guarantee") and the inflation target. The paper will compare the historical data with the rule. When the predictions of the Deficit Rule are compared to historical data from 1965, we find that fiscal policy aligns with what the Deficit Rule predicts with two exceptions: the stagflation of the 1970s and the current increases in budget deficits.
Subjects: 
modern monetary theory
Taylor rule
JEL: 
E32
E63
H62
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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